Living Wage: The Path to Living Wage

Learn more about the concept of Living Wage and its importance for social sustainability.

At Port International, we take our responsibility for the environment and the people we work with very seriously. Our goal is to not only deliver fresh and high-quality fruits and vegetables to our customers, but also to ensure that every step in our supply chain is ethically justifiable and socially sustainable. An essential component of social sustainability is the fair remuneration of every actor along the value chain. A key aspect of this commitment is the concept of the Living Wage. A Living Wage is paid when employees receive a wage that is sufficient to provide them and their families with a decent standard of living at their place of residence at the given time. A decent standard of living includes food, water, housing, education, healthcare, transport, clothing, and other essential needs, including provision for unexpected events.

Living Wage: The Roots of Living Wage

The concept of “Living Wage,” a wage that ensures a decent life, has its roots in the labour movement at the end of the 19th and beginning of the 20th centuries. The idea of a wage sufficient to lead a dignified life was adopted by various social movements, trade unions, and social reform groups. One of the first documented proposals for such a concept came from social reformer and economist Florence Kelley, who advocated for the introduction of minimum wages in the United States at the end of the 19th century to combat poverty. Kelley and other activists of the time argued that wages should not only cover basic needs but also allow employees and their families to maintain a decent standard of living.

Establishment of the Living Wage Foundation

In the United Kingdom, the “Living Wage Foundation” was founded in 2001 and has since played a central role in promoting the concept of the Living Wage. Its task consists in accrediting companies that commit to paying their employees a wage which reflects the real cost of living. Thus, the concept of Living Wage is not attributable to a single person or a specific time but has developed from a broad social movement that campaigns for justice and decent working conditions. It reflects the aspiration to reduce social inequalities and ensure that all employees can live on their work.

Global Living Wage Coalition

The next important step in the increasing awareness of the importance of living incomes and wages was the founding of the Global Living Wage Coalition (GLWC) in 2013. It is a consortium of several international organizations aiming to promote and standardize the concept of a Living Wage worldwide. The leading members of the GLWC include the Anchor Research Institute, Fairtrade International, ISEAL, SAI, and the Rainforest Alliance, all of whom bring expertise from various fields such as labour rights, sustainable development, and social justice to the coalition.

Living Wage vs. Minimum Wage

What distinguishes a Living Wage from a minimum wage? Minimum wage and Living Wage have the same objectives, a fact that often leads to confusion of the two concepts which are actually quite different. The minimum wage is a legal construct politically set by the respective government, while the Living Wage is currently a voluntary initiative. A Living Wage usually goes beyond what is legally established as a minimum wage. Rather, it is the wage that enables employees and their families to maintain a decent standard of living, including all necessary living expenses such as housing, food, education, healthcare, and a small cushion for unforeseen expenses. The approach relies on the local capturing and auditing of the wages to meet actual living costs.

 

“The compensation that a worker receives at a particular location for a standard workweek should be sufficient to enable a decent standard of living for the worker and his or her family. Elements of a decent standard of living include food, water, housing, education, healthcare, transport, clothing, and other essential needs, as well as provision for unexpected events.” – GLWC definition

What Benefits Do Living Wages Offer to Companies?

There are various reasons for a company to pay a Living Wage. Some are motivated by the desire to follow the UN Guiding Principles on Business and Human Rights and advocate for a decent standard of living, while others aim to contribute to achieving the UN Sustainable Development Goals. These include ending poverty and access to decent work, encompassing Living Incomes and Wages. However, even from an economic perspective, implementing a compensation that respects human dignity can make sense for companies:

  • Enhancement of the attractiveness of the locations of multinational companies concerned about Living Wages
  • Increase of productivity and reduction of production costs by minimising workforce turnover
  • Attraction of qualified workers
  • Increase of employee satisfaction and commitment
  • Fewer absences due to illness and higher productivity thanks to a Living Wage which ensures adequate nutrition and housing.

What Are the Biggest Challenges in Implementing a Living Wage?

Implementing a Living Wage is no easy task; it requires a long-term and individual strategy. There are diverse challenges caused by a multitude of individual scenarios occurring in different industries, geographies, and supply chains. Just because a solution for paying a Living Wage has been found for one case does not mean it would work elsewhere. This poses a challenge for those seeking a Living Wage solution because, more often than not, they cannot draw on experiences from other projects.

To achieve a Living Wage, every actor in the supply chain, including retailers, suppliers, unions and other labour groups, industry organisations, governments, civil society, and academia, must support it according to their own capacity. Achieving this understanding of co-responsibility is key to successful implementation.

Implementation of Living Wage

Despite the challenge, we at Port International have decided to commit ourselves to the specific goal of implementing Living Wages to achieve a decent standard of living. A concrete example of our commitment can be found in the Dominican Republic, where we close wage gaps with vouchers for local supermarkets. This initiative ensures that our employees and their families can cover their basic needs. We are currently working to ensure that Living Wages are paid at all our banana production sites by 2030.

The Role of Living Wage in Our Sustainability Strategy

The concept of Living Wage is deeply embedded in our sustainability strategy. We understand that long-term partnerships based on trust, transparency, and fairness are essential to promote both ecological and social sustainability. Our efforts in the area of Living Wage complement our commitment to environmental protection such as the reduction of CO₂ emissions, promotion of sustainable farming practices, and participation in sustainable water management programmes.

We are proud to be among the pioneers in the fruit and vegetable industry who are advocating for Living Wages. Our audits show that most of our production sites already pay a Living Wage, and we are determined to close any existing gaps. We believe this commitment not only improves the quality of life for our direct partners, but that it will have long-term positive effects on the entire industry.

We invite you to join us on this journey to a more sustainable and fairer tomorrow. At Port International, we understand that true sustainability requires recognizing and valuing every individual in our supply chain. Together, we can shape a future where everyone can lead a fair and dignified life.